Atkins boss plans to slash equity investment in PFI

Keith Clarke sets out his vision for consultant – which could involve selling off its 20% stake in Metronet

Atkins chief executive Keith Clarke is to reduce the consultant's equity investment in PFI schemes, with one potential target being its 20% stake in Metronet, the consortium set up to work on London Underground.

Clarke, who was installed as chief executive last October, believes that this will free up cash and allow Atkins to focus on design work for PFI bids.

He said: "The PFI model we will use will involve putting in the minimum equity needed, which could be zero, and recycling it at the earliest sensible point."

According to Clarke, contractors, designers and consultants will become increasingly reluctant to own the projects they work on.

He said: "The biggest investment we have in equity is Metronet and we're more than content to hold on to that for four to seven years, but I'd be surprised if we held on to it for much more than eight."

He added: "There will probably still be the need for some equity stakes in many models, but not necessarily by the same people who are doing the work. Already the secondary market is coming out earlier and earlier."

Contractors can use this secondary market to dispose of their holdings. Atkins sold off stakes in two road projects to Balfour Beatty last year.

Clarke's strategy is underpinned by a belief that the financing structure of PFI is about to change. He said: "I think you'll see the government reserving its right to doing some other type of finance than bank debt. It could be a bond or a government loan wrapped by something – it would be a model we're not familiar with."

Atkins will focus much of its PFI work on helping out other companies with their bids by carrying out technical due diligence. It already does this for Japanese contractor Kajima on its PFI education projects in the UK.

The PFI model we will use will involve the minimum equity needed, which could be zero

Keith Clarke

Clarke hinted that the company would be aiming to grow its presence in south-east Asia. Atkins has about 1000 staff in the region and its large-scale urbanisation programme offers opportunities for further expansion.

Atkins is listed in the support services sector of the stock exchange. There have long been complaints that the companies in the sector are too diverse to be lumped together. Clarke said that it would probably be divided into at least two sub-sectors within the next two years, one dealing with white-collar professional services work, and the other aimed at lower-end contracts, such as facilities management.